Consumer Financial Protection Bureau is an independent bureau providing consumers with financial markets information. The bureau aims to implement and enforce consumer financial laws, review business practices, monitor the financial marketplace, and establish consumer website and hotline to address the complaints and questions. Consumer Financial Protection Bureau was formed in 2010 and is headquartered in Washington, District of Columbia.
PO Box 4503
Iowa City, IA 52244
Founded in 2010
CFPB Orders Guarantee Mortgage Corporation to Pay Civil Penalty of $228,000
Jun 8 15
CFPB ordered Guarantee Mortgage Corporation to pay a civil penalty of $228,000 after it allegedly violated the Loan Originator Compensation Rule. CFPB alleges that Guarantee Mortgage Corporation paid its branch managers in part based on the interest rates of the loans they closed, meaning consumers were more likely to be steered into more expensive loans. The company, which had 10 branches in the San Francisco Bay area, is no longer in business, and the money would go to the CFPB Civil Penalty Fund.
PayPal Agrees $25 Million Settlement with the Consumer Financial Protection Bureau
May 19 15
PayPal has agreed to a $25 million settlement with the Consumer Financial Protection Bureau dealing with allegations the payments company essentially forced consumers to use its online credit product. The CFPB's complaint and proposed order, claims the company engaged in deceptive marketing and illegally registered consumers in PayPal Credit, formerly known as Bill Me Later, which allows users to take out a line of credit when making a payment online. The company has agreed to pay $15 million in redress to consumers and a $10 million penalty. The CFPB alleges PayPal 'often' enrolled consumers automatically into the credit product without their consent and forced customers to pay for items using PayPal Credit by not making other payment options available. The company also was called out for allegedly mishandling billing and payment disputes, and using deceptive marketing. The bureau said PayPal failed to honor advertised promotions and abusively charged consumers 'deferred-interest' fees. PayPal has agreed to the consent order without admitting or denying the findings. It also waived its rights to a judicial review or to challenge the allegations as part of the pending settlement. In addition to paying the penalty and consumer redress, PayPal has agreed in the order to improve its disclosures to consumers.
The Consumer Financial Protection Bureau Files Complaint and Consent Order in Federal Court against PayPal, Inc
May 19 15
The Consumer Financial Protection Bureau filed a complaint and proposed consent order in federal court against PayPal, Inc. for illegally signing up consumers for its online credit product, PayPal Credit, formerly known as Bill Me Later. The CFPB alleges that PayPal deceptively advertised promotional benefits that it failed to honor, signed consumers up for credit without their permission, made them use PayPal Credit instead of their preferred payment method, and then mishandled billing disputes. Under the proposed order, PayPal would pay $15 million in consumer redress and a $10 million penalty, and it would be required to improve its disclosures and procedures. Specifically, the CFPB alleges that the company: Deceptively advertised promotional benefits: The CFPB alleges that PayPal failed to honor advertised promotions, such as a $5 or $10 promised credit toward consumer purchases; Abusively charged consumers deferred interest: The CFPB alleges that PayPal offered consumers limited-time, deferred-interest promotions, and that PayPal purported to let consumers pick how payments would be applied to these promotional balances. But consumers who attempted to contact the company to get more information or request to apply their payments to promotional balances often could not get through to the company’s customer service line or were given inaccurate information. Many such consumers were hit with deferred-interest fees that, due to the company’s conduct, they could not avoid; Enrolled consumers in PayPal Credit without their knowledge or consent: The CFPB alleges that the company often automatically enrolled consumers in PayPal Credit when those consumers were signing up for a regular PayPal account or making purchases. The company enrolled other consumers while they tried canceling or closing out of the application process. Many consumers ended up enrolled in PayPal Credit without knowing how or why they were enrolled. They discovered their accounts only after finding a credit-report inquiry or receiving welcome emails, billing statements, or debt-collection calls for amounts past due, including late fees and interest; Made consumers use PayPal Credit for purchases instead of their preferred payment method: The CFPB alleges that the company automatically set or preselected the default payment method for all purchases made through PayPal to PayPal Credit. This meant consumers used PayPal Credit even when they intended to use another method of payment such as a linked credit card or checking account. Other consumers were not able to select another payment method, finding that their purchases were charged to a PayPal Credit account even when they affirmatively selected another payment. Many of these consumers incurred late fees and interest because they did not know they had made purchases through PayPal Credit; Engaged in illegal billing practices: The CFPB alleges that the company failed to post payments or failed to remove late fees and interest charges from consumers’ bills even when the consumers were unable to make payments because of website failures. Numerous consumers reported that the company lost payment checks or took more than a week to process checks. Mishandled consumer disputes about payments: The CFPB also alleges that PayPal mishandled consumers’ billing disputes and made billing errors. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Under the terms of the proposed consent order filed today, PayPal would: Pay $15 million in redress to victims: PayPal would reimburse consumers who were mistakenly enrolled in PayPal Credit, who mistakenly paid for a purchase with PayPal Credit, or who incurred fees or deferred interest as a result of the company’s inadequate disclosures and flawed customer-service practices; Improve disclosures: PayPal would be required to take steps to improve its consumer disclosures related to enrollment in PayPal Credit to ensure that consumers know they are enrolling or using the product for a purchase. These improved disclosures would also apply to fees and deferred interest to ensure that consumers understand how their payments will be allocated; and Pay $10 million civil penalty: PayPal would pay $10 million to the CFPB’s Civil Penalty Fund.